Peru: Inflation surges in March
April 1, 2011
In March, consumer prices jumped 0.70% over the previous month, which almost doubled the 0.38% increase observed in February, and was well above market expectations of a 0.50% rise. The monthly spike reflected higher prices for culture and education as a result of the start of the academic year and for food and beverages, fuelled by higher international food prices. Owing to the strong price spike, annual headline inflation rose from 2.2% in February to 2.7%, which represented the highest inflation rate since July 2009. The reading exceeded the Central Bank's target of 2.0% for eight consecutive months and now sits close to the upper limit of the tolerance margin of 1.0%. Headline inflation has been rising since the start of 2010 and peaked in September 2010 at 2.4%. In a recent statement, Central Bank President Julio Velarde argued that inflation is likely to accelerate to 3.0% this year, suggesting that the Central Bank will revise its previous estimate that inflation would range between 1.5% and 2.5%.
Author: Ricardo Aceves, Senior Economist